External issues rock stocks, gold prices reach 6-year high

External issues rock stocks, gold prices reach 6-year high

SET index off 1.8%, unrest hits HK bourse

The Stock Exchange of Thailand (SET) index on Tuesday slumped nearly 2% as political and financial turbulence on the external front sent investor confidence into disarray.

Panic selling of equities was seen in bourses across Asia as investment appetite was riled by brewing tensions over the Sino-US trade row, Hong Kong’s protracted political unrest and a sharp fall in the Argentine peso prompted by Sunday’s primary election that saw a possible return of the country’s populist left-leaning government.

Hong Kong’s Hang Seng index suffered the most, plummeting 2.1%, with Thailand’s benchmark in second at -1.8%.

The SET index closed at 1,620.23, down 30.41 points from Friday’s close, in trade worth 64.2 billion baht. Foreign investors were net sellers of 3.4 billion baht, while institutional investors offloaded a net 838.8 million baht worth of shares.

“The Hong Kong protest is one of the major factors affecting global bourses,” said Nuttachart Mekmasin, executive director of Trinity Securities. “The latest development in Argentina also poses a concern because investors are worried about how a [possible return] of populist policies could impact fiscal discipline. Effects from Argentina have spread to other emerging markets.”

Vajiralux Sanglerdaillapachai, head of research at Asia Wealth Securities, said Thai stocks traded under pressure from various global factors, including US President Donald Trump’s threat to impose an additional tariff on Chinese goods by 10% worth US$300 billion on Sept 1.

For the SET index, EA shares incurred the biggest loss at 5.9%, followed by MTC (-4.3%), AOT (-3.6%), CPALL (-2.9%) and PTTGC (-2.8%).

Disappointing second-quarter earnings from some SET-listed firms and the recently announced merger of TMB Bank and Thanachart Bank, under Thanachart Capital Plc (TCAP), are domestic factors frowned upon by investors, Mr Nuttachart said.

“The second-quarter earnings of CP All Plc dealt a blow to the stock market,” he said. “Investors also sold TMB and TCAP shares to avoid a dilution effect.”

Gold rush

Gold prices denominated in the baht and US dollars reached a six-year high, with the price of 96.5% purity gold reaching 22,200 baht per one baht-weight and global gold prices hovering at more than $1,500 per ounce.

“Gold prices have continued climbing for 12 consecutive weeks. I have never seen this before,” said Boonlert Siripatvanich, chief executive of Ausiris Co Ltd.

Gold prices normally will rise for 3-4 weeks, then the price will stay idle and decline afterward, he said.

Mr Boonlert said the Sino-US trade war evolving into a currency war has prompted investors to shift capital from risky assets to gold.

“The market mood is now in a sense that investors want to buy gold because it is more stable, rather than take profits,” he said.